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Chair of governors Liz Morgan did not accept many of the claims in the report.

But she said there had been an incident when a child had referred to another as being ‘gay’ but claimed this had been ‘blown out of proportion’.

She said the school did not tolerate that form of abuse and spoke to the child and parents – and had since challenged it with Ofsted but have received no response.

The statement also said that the future of the school was now in doubt because of a falling pupil role.

Leadership and management at the primary school were also branded inadequate by Ofsted, because it said the head teacher and governors had not acted ‘decisively’ to tackle bullying and poor behaviour.

The report said parents were ‘concerned’ about behaviour which partly explained the falling numbers of pupils which plummeted from 25 in March to 13 over the following six weeks.

Documentation relating to child protection issues was also revealed as having not been kept in a safe place, while appropriate procedures were not always followed in relation to ‘potentially serious’ issues.

Recommendations include an urgent improvement to pupils’ behaviour and safety and an external review of governance.

But the report did identify teachers’ good questioning skills, good teaching of the sounds letters make and good provision of opportunities for pupils’ spiritual, moral, social and cultural development.

The report said governance had also improved but the challenge to the head teacher had not resulted in improvements to the extent required.

In a statement, the school said: "We were disappointed by Ofsted’s findings but are obviously working to address the issues identified by Ofsted.

"We were particularly upset by the allegations of racist and homophobic bullying as we do not believe there have been any such incidents in the school and we are not aware of the basis of Ofsted’s findings."

"The school has worked with to ensure children are aware of the issues surrounding discrimination and to encourage an inclusive culture."

"Unfortunately the long-term future of the school is in doubt due to falling pupil numbers. It is our view that the experience of Ravenstonedale Endowed School shows the challenges faced by small rural schools in Cumbria.

"Significant reductions in the budgets available to the county council has meant that they are not able to provide the same support to schools which is particularly important for small rural schools who do not have the same resources and staff as larger schools.

"We are also concerned that Ofsted is not sensitive to the particular challenges faced by small rural schools, nor the many advantages such schools can offer to their pupils.

"We believe that the issue of how to provide adequate support to small rural schools urgently needs to be addressed so that the large number of such schools in Cumbria can continue to flourish."